Medisave, Medishield ... Medi-crisis?

IN AN October interview with Fortune magazine, Mr Alan Greenspan
was asked what the biggest economic worries were at this point in
history. Speaking of America, he said Medicare was the most serious
fiscal problem out there.
.
"When the baby boomer retires, we are going to have either to raise
taxes very sharply or cut benefits by half," he said. "Prudent
policy would be to adjust the longer term now, not when it becomes
a serious problem for people who have already retired and are told
after the fact that they will not be getting the real Medicare that
they expected."
.
We are running into the same problem here in Singapore. In place of
"Medicare", read Medisave/ MediShield. Statistics indicate medical
inflation  which hit 6.2 per cent in October  is running at
almost twice the national inflation rate.
.
In his New Year message, the Prime Minister has indicated that
means testing will be used for hospital admission, which means that
even if people are prepared to downgrade to a C or B2 class ward,
they may have to pay more, because they fail the means test.
.
is just MEDISHIELD suffificent?
.
Currently, MediShield cover, which the Government has said it will
improve, has several shortcomings.
.
The MediShield policy, designed to cover only Class C/B2
hospitalisation, has a schedule of benefits, which limits the
payout for a certain procedure or operation. There is also a
deductible  the first $1,000 to $3,000 of any bill, depending on
the ward class  and co-insurance  a 10- to 20-per-cent share of
the total bill, depending on the bill size  that the patient will
have to bear himself.
.
As a result, a significant portion of medical bills will remain
uncovered and Medi-Shield policyholders will be left to pay these
amounts from a combination of their Medisave account and
cash.
.
We also have thousands of Singaporeans who are not even covered by
MediShield. Many Singaporeans do not have adequate funds in their
Medisave accounts to pay for their own medical bills, because their
Medisave funds have been used to pay the bills of spouses, parents
or siblings. The baby boomers have often had to take care of their
parents' medical cost.
.
Many Singaporeans rely foolishly on the fact that they have some
medical cover provided by their employers. Seldom do they realise
that such cover is often woefully inadequate. Looking at a medical
institution recently, I realised that their nurses had only between
$7,000 and $10,000 in annual hospitalisation cover. This will be
adequate only for minor conditions like appendicitis or fibroids,
not for any significant medical treatment.
.
More significantly, people fail to consider the fact that the
medical cover provided by their employers ceases when employment
ends, including when they retire or if they are too ill to
work.
.
Post-retirement is when people most need medical cover. A recent
Ministry of Health (MOH) survey showed that Singaporeans "suffer
eight years of poor health".
.
The current Medisave balance of $33,000 isn't going to pay for
eight years of medical treatment even if you also have MediShield,
after taking into account payment for the deductibles, co-insurance
and anything beyond the amount paid by the schedule of
benefits.
.
In the case of a catastrophic medical condition like cancer, it may
not even last two years. If the funds in Medisave are used to
directly pay for medical bills, there may not be anything left to
pay the MediShield premiums.
.
MEDISHIELD'S WEAKNESSES
.
The current MediShield plan has two inherent weaknesses: Firstly,
it does not cover you for your lifetime.
.
Secondly, it has a complex structure of deductibles, co-insurance
and sub-limits. Like many private shield plans, MediShield should
become an "as charged" plan, which pays the bill as charged by the
hospital for at least Class C hospitalisation.
.
I question the need for a deductible in the MediShield cover, since
patients in Class C or B2 will not be hospitalised unless it is
necessary.
.
The effect of imposing deductibles on people who can only afford
Class C or B2 treatment is, as someone put it to me, "penalising
the wrong party".
.
A level of co-insurance forces healthcare providers to consult
patients when there are choices in treatment, as the patient bears
some of the cost.
.
This reduces over-servicing by providers and thus reduces claims
costs. However, even co-insurance should be subject to an annual
limit to protect patients with catastrophic medical
conditions.
.
MEDISAVE IS INADEQUATE
.
The idea that Medisave can be used to pay (directly) for medical
cost should be banished. At the current rate of medical inflation,
it will become totally inadequate.
.
Medisave should be a fund set aside for the payment of medical
insurance premiums, post-retirement and perhaps for payment of a
limited co-insurance amount.
.
Currently, many employers buy year-to-year inpatient medical
insurance for their staff, known as Group Hospitalisation Schemes
(GHS). For employers with several thousand employees the cost can
run into hundreds of thousands of dollars, if not millions.
.
It is a pity that these funds are not now invested towards
providing employees with port-able medical insurance plans, which
will see them covered beyond retirement. It will also provide them
with much higher limits of cover, sufficient to meet the cost of
catastrophic medical conditions like cancer and stroke.
.
MINDSET CHANGE NEEDED
.
What is required is a mindset change on the part of both employers
and employees. Both must focus on the longer term.
.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.
In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance
Institute.
little or no medical insurance who are being squeezed by financial
companies who had taken over their debt from the medical
providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance Institute.
STANLEY JEREMIAH

IN AN October interview with Fortune magazine, Mr Alan Greenspan
was asked what the biggest economic worries were at this point in
history. Speaking of America, he said Medicare was the most serious
fiscal problem out there.
.
"When the baby boomer retires, we are going to have either to raise
taxes very sharply or cut benefits by half," he said. "Prudent
policy would be to adjust the longer term now, not when it becomes
a serious problem for people who have already retired and are told
after the fact that they will not be getting the real Medicare that
they expected."
.
We are running into the same problem here in Singapore. In place of
"Medicare", read Medisave/ MediShield. Statistics indicate medical
inflation  which hit 6.2 per cent in October  is running at
almost twice the national inflation rate.
.
In his New Year message, the Prime Minister has indicated that
means testing will be used for hospital admission, which means that
even if people are prepared to downgrade to a C or B2 class ward,
they may have to pay more, because they fail the means test.
.
is just MEDISHIELD suffificent?
.
Currently, MediShield cover, which the Government has said it will
improve, has several shortcomings.
.
The MediShield policy, designed to cover only Class C/B2
hospitalisation, has a schedule of benefits, which limits the
payout for a certain procedure or operation. There is also a
deductible  the first $1,000 to $3,000 of any bill, depending on
the ward class  and co-insurance  a 10- to 20-per-cent share of
the total bill, depending on the bill size  that the patient will
have to bear himself.
.
As a result, a significant portion of medical bills will remain
uncovered and Medi-Shield policyholders will be left to pay these
amounts from a combination of their Medisave account and
cash.
.
We also have thousands of Singaporeans who are not even covered by
MediShield. Many Singaporeans do not have adequate funds in their
Medisave accounts to pay for their own medical bills, because their
Medisave funds have been used to pay the bills of spouses, parents
or siblings. The baby boomers have often had to take care of their
parents' medical cost.
.
Many Singaporeans rely foolishly on the fact that they have some
medical cover provided by their employers. Seldom do they realise
that such cover is often woefully inadequate. Looking at a medical
institution recently, I realised that their nurses had only between
$7,000 and $10,000 in annual hospitalisation cover. This will be
adequate only for minor conditions like appendicitis or fibroids,
not for any significant medical treatment.
.
More significantly, people fail to consider the fact that the
medical cover provided by their employers ceases when employment
ends, including when they retire or if they are too ill to
work.
.
Post-retirement is when people most need medical cover. A recent
Ministry of Health (MOH) survey showed that Singaporeans "suffer
eight years of poor health".
.
The current Medisave balance of $33,000 isn't going to pay for
eight years of medical treatment even if you also have MediShield,
after taking into account payment for the deductibles, co-insurance
and anything beyond the amount paid by the schedule of
benefits.
.
In the case of a catastrophic medical condition like cancer, it may
not even last two years. If the funds in Medisave are used to
directly pay for medical bills, there may not be anything left to
pay the MediShield premiums.
.
MEDISHIELD'S WEAKNESSES
.
The current MediShield plan has two inherent weaknesses: Firstly,
it does not cover you for your lifetime.
.
Secondly, it has a complex structure of deductibles, co-insurance
and sub-limits. Like many private shield plans, MediShield should
become an "as charged" plan, which pays the bill as charged by the
hospital for at least Class C hospitalisation.
.
I question the need for a deductible in the MediShield cover, since
patients in Class C or B2 will not be hospitalised unless it is
necessary.
.
The effect of imposing deductibles on people who can only afford
Class C or B2 treatment is, as someone put it to me, "penalising
the wrong party".
.
A level of co-insurance forces healthcare providers to consult
patients when there are choices in treatment, as the patient bears
some of the cost.
.
This reduces over-servicing by providers and thus reduces claims
costs. However, even co-insurance should be subject to an annual
limit to protect patients with catastrophic medical
conditions.
.
MEDISAVE IS INADEQUATE
.
The idea that Medisave can be used to pay (directly) for medical
cost should be banished. At the current rate of medical inflation,
it will become totally inadequate.
.
Medisave should be a fund set aside for the payment of medical
insurance premiums, post-retirement and perhaps for payment of a
limited co-insurance amount.
.
Currently, many employers buy year-to-year inpatient medical
insurance for their staff, known as Group Hospitalisation Schemes
(GHS). For employers with several thousand employees the cost can
run into hundreds of thousands of dollars, if not millions.
.
It is a pity that these funds are not now invested towards
providing employees with port-able medical insurance plans, which
will see them covered beyond retirement. It will also provide them
with much higher limits of cover, sufficient to meet the cost of
catastrophic medical conditions like cancer and stroke.
.
MINDSET CHANGE NEEDED
.
What is required is a mindset change on the part of both employers
and employees. Both must focus on the longer term.
.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.
In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance
Institute.

MEDISHIELD'S WEAKNESSES
.
The current MediShield plan has two inherent weaknesses: Firstly,
it does not cover you for your lifetime.
.
Secondly, it has a complex structure of deductibles, co-insurance
and sub-limits. Like many private shield plans, MediShield should
become an "as charged" plan, which pays the bill as charged by the
hospital for at least Class C hospitalisation.
.
I question the need for a deductible in the MediShield cover, since
patients in Class C or B2 will not be hospitalised unless it is
necessary.
.
The effect of imposing deductibles on people who can only afford
Class C or B2 treatment is, as someone put it to me, "penalising
the wrong party".
.
A level of co-insurance forces healthcare providers to consult
patients when there are choices in treatment, as the patient bears
some of the cost.
.
This reduces over-servicing by providers and thus reduces claims
costs. However, even co-insurance should be subject to an annual
limit to protect patients with catastrophic medical
conditions.
.
MEDISAVE IS INADEQUATE
.
The idea that Medisave can be used to pay (directly) for medical
cost should be banished. At the current rate of medical inflation,
it will become totally inadequate.
.
Medisave should be a fund set aside for the payment of medical
insurance premiums, post-retirement and perhaps for payment of a
limited co-insurance amount.
.
Currently, many employers buy year-to-year inpatient medical
insurance for their staff, known as Group Hospitalisation Schemes
(GHS). For employers with several thousand employees the cost can
run into hundreds of thousands of dollars, if not millions.
.
It is a pity that these funds are not now invested towards
providing employees with port-able medical insurance plans, which
will see them covered beyond retirement. It will also provide them
with much higher limits of cover, sufficient to meet the cost of
catastrophic medical conditions like cancer and stroke.
.
MINDSET CHANGE NEEDED
.
What is required is a mindset change on the part of both employers
and employees. Both must focus on the longer term.
.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.
In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance
Institute.

.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.

In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance Institute.
STANLEY JEREMIAH

IN AN October interview with Fortune magazine, Mr Alan Greenspan
was asked what the biggest economic worries were at this point in
history. Speaking of America, he said Medicare was the most serious
fiscal problem out there.
.
"When the baby boomer retires, we are going to have either to raise
taxes very sharply or cut benefits by half," he said. "Prudent
policy would be to adjust the longer term now, not when it becomes
a serious problem for people who have already retired and are told
after the fact that they will not be getting the real Medicare that
they expected."
.
We are running into the same problem here in Singapore. In place of
"Medicare", read Medisave/ MediShield. Statistics indicate medical
inflation  which hit 6.2 per cent in October  is running at
almost twice the national inflation rate.
.
In his New Year message, the Prime Minister has indicated that
means testing will be used for hospital admission, which means that
even if people are prepared to downgrade to a C or B2 class ward,
they may have to pay more, because they fail the means test.
.
is just MEDISHIELD suffificent?
.
Currently, MediShield cover, which the Government has said it will
improve, has several shortcomings.
.
The MediShield policy, designed to cover only Class C/B2
hospitalisation, has a schedule of benefits, which limits the
payout for a certain procedure or operation. There is also a
deductible  the first $1,000 to $3,000 of any bill, depending on
the ward class  and co-insurance  a 10- to 20-per-cent share of
the total bill, depending on the bill size  that the patient will
have to bear himself.
.
As a result, a significant portion of medical bills will remain
uncovered and Medi-Shield policyholders will be left to pay these
amounts from a combination of their Medisave account and
cash.
.
We also have thousands of Singaporeans who are not even covered by
MediShield. Many Singaporeans do not have adequate funds in their
Medisave accounts to pay for their own medical bills, because their
Medisave funds have been used to pay the bills of spouses, parents
or siblings. The baby boomers have often had to take care of their
parents' medical cost.
.
Many Singaporeans rely foolishly on the fact that they have some
medical cover provided by their employers. Seldom do they realise
that such cover is often woefully inadequate. Looking at a medical
institution recently, I realised that their nurses had only between
$7,000 and $10,000 in annual hospitalisation cover. This will be
adequate only for minor conditions like appendicitis or fibroids,
not for any significant medical treatment.
.
More significantly, people fail to consider the fact that the
medical cover provided by their employers ceases when employment
ends, including when they retire or if they are too ill to
work.
.
Post-retirement is when people most need medical cover. A recent
Ministry of Health (MOH) survey showed that Singaporeans "suffer
eight years of poor health".
.
The current Medisave balance of $33,000 isn't going to pay for
eight years of medical treatment even if you also have MediShield,
after taking into account payment for the deductibles, co-insurance
and anything beyond the amount paid by the schedule of
benefits.
.
In the case of a catastrophic medical condition like cancer, it may
not even last two years. If the funds in Medisave are used to
directly pay for medical bills, there may not be anything left to
pay the MediShield premiums.
.
MEDISHIELD'S WEAKNESSES
.
The current MediShield plan has two inherent weaknesses: Firstly,
it does not cover you for your lifetime.
.
Secondly, it has a complex structure of deductibles, co-insurance
and sub-limits. Like many private shield plans, MediShield should
become an "as charged" plan, which pays the bill as charged by the
hospital for at least Class C hospitalisation.
.
I question the need for a deductible in the MediShield cover, since
patients in Class C or B2 will not be hospitalised unless it is
necessary.
.
The effect of imposing deductibles on people who can only afford
Class C or B2 treatment is, as someone put it to me, "penalising
the wrong party".
.
A level of co-insurance forces healthcare providers to consult
patients when there are choices in treatment, as the patient bears
some of the cost.
.
This reduces over-servicing by providers and thus reduces claims
costs. However, even co-insurance should be subject to an annual
limit to protect patients with catastrophic medical
conditions.
.

MEDISAVE IS INADEQUATE
.
The idea that Medisave can be used to pay (directly) for medical
cost should be banished. At the current rate of medical inflation,
it will become totally inadequate.
.
Medisave should be a fund set aside for the payment of medical
insurance premiums, post-retirement and perhaps for payment of a
limited co-insurance amount.
.
Currently, many employers buy year-to-year inpatient medical
insurance for their staff, known as Group Hospitalisation Schemes
(GHS). For employers with several thousand employees the cost can
run into hundreds of thousands of dollars, if not millions.
.
It is a pity that these funds are not now invested towards
providing employees with port-able medical insurance plans, which
will see them covered beyond retirement. It will also provide them
with much higher limits of cover, sufficient to meet the cost of
catastrophic medical conditions like cancer and stroke.
.
MINDSET CHANGE NEEDED
.
What is required is a mindset change on the part of both employers
and employees. Both must focus on the longer term.
.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.
In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance Institute.
STANLEY JEREMIAH

IN AN October interview with Fortune magazine, Mr Alan Greenspan
was asked what the biggest economic worries were at this point in
history. Speaking of America, he said Medicare was the most serious
fiscal problem out there.
.
"When the baby boomer retires, we are going to have either to raise
taxes very sharply or cut benefits by half," he said. "Prudent
policy would be to adjust the longer term now, not when it becomes
a serious problem for people who have already retired and are told
after the fact that they will not be getting the real Medicare that
they expected."
.
We are running into the same problem here in Singapore. In place of
"Medicare", read Medisave/ MediShield. Statistics indicate medical
inflation  which hit 6.2 per cent in October  is running at
almost twice the national inflation rate.
.
In his New Year message, the Prime Minister has indicated that
means testing will be used for hospital admission, which means that
even if people are prepared to downgrade to a C or B2 class ward,
they may have to pay more, because they fail the means test.
.
is just MEDISHIELD suffificent?
.
Currently, MediShield cover, which the Government has said it will
improve, has several shortcomings.
.
The MediShield policy, designed to cover only Class C/B2
hospitalisation, has a schedule of benefits, which limits the
payout for a certain procedure or operation. There is also a
deductible  the first $1,000 to $3,000 of any bill, depending on
the ward class  and co-insurance  a 10- to 20-per-cent share of
the total bill, depending on the bill size  that the patient will
have to bear himself.
.
As a result, a significant portion of medical bills will remain
uncovered and Medi-Shield policyholders will be left to pay these
amounts from a combination of their Medisave account and
cash.
.
We also have thousands of Singaporeans who are not even covered by
MediShield. Many Singaporeans do not have adequate funds in their
Medisave accounts to pay for their own medical bills, because their
Medisave funds have been used to pay the bills of spouses, parents
or siblings. The baby boomers have often had to take care of their
parents' medical cost.
.
Many Singaporeans rely foolishly on the fact that they have some
medical cover provided by their employers. Seldom do they realise
that such cover is often woefully inadequate. Looking at a medical
institution recently, I realised that their nurses had only between
$7,000 and $10,000 in annual hospitalisation cover. This will be
adequate only for minor conditions like appendicitis or fibroids,
not for any significant medical treatment.
.
More significantly, people fail to consider the fact that the
medical cover provided by their employers ceases when employment
ends, including when they retire or if they are too ill to
work.
.
Post-retirement is when people most need medical cover. A recent
Ministry of Health (MOH) survey showed that Singaporeans "suffer
eight years of poor health".
.
The current Medisave balance of $33,000 isn't going to pay for
eight years of medical treatment even if you also have MediShield,
after taking into account payment for the deductibles, co-insurance
and anything beyond the amount paid by the schedule of
benefits.
.
In the case of a catastrophic medical condition like cancer, it may
not even last two years. If the funds in Medisave are used to
directly pay for medical bills, there may not be anything left to
pay the MediShield premiums.
.

MEDISHIELD'S WEAKNESSES
.
The current MediShield plan has two inherent weaknesses: Firstly,
it does not cover you for your lifetime.
.
Secondly, it has a complex structure of deductibles, co-insurance
and sub-limits. Like many private shield plans, MediShield should
become an "as charged" plan, which pays the bill as charged by the
hospital for at least Class C hospitalisation.
.
I question the need for a deductible in the MediShield cover, since
patients in Class C or B2 will not be hospitalised unless it is
necessary.
.
The effect of imposing deductibles on people who can only afford
Class C or B2 treatment is, as someone put it to me, "penalising
the wrong party".
.
A level of co-insurance forces healthcare providers to consult
patients when there are choices in treatment, as the patient bears
some of the cost.
.
This reduces over-servicing by providers and thus reduces claims
costs. However, even co-insurance should be subject to an annual
limit to protect patients with catastrophic medical
conditions.
.
MEDISAVE IS INADEQUATE
.
The idea that Medisave can be used to pay (directly) for medical
cost should be banished. At the current rate of medical inflation,
it will become totally inadequate.
.
Medisave should be a fund set aside for the payment of medical
insurance premiums, post-retirement and perhaps for payment of a
limited co-insurance amount.
.
Currently, many employers buy year-to-year inpatient medical
insurance for their staff, known as Group Hospitalisation Schemes
(GHS). For employers with several thousand employees the cost can
run into hundreds of thousands of dollars, if not millions.
.
It is a pity that these funds are not now invested towards
providing employees with port-able medical insurance plans, which
will see them covered beyond retirement. It will also provide them
with much higher limits of cover, sufficient to meet the cost of
catastrophic medical conditions like cancer and stroke.
.
MINDSET CHANGE NEEDED
.
What is required is a mindset change on the part of both employers
and employees. Both must focus on the longer term.
.
Medical cost as a percentage of total remuneration cost will rise
disproportionately because medical inflation outstrips national
inflation.
.
In the long run, employers cannot continue to increase spending on
medical benefits at current levels. It is not sustainable. The only
available option has been to cut back on the level of medical
benefits, leaving employees more exposed in the case of a serious
medical condition. The Civil Service was the first to impose such
measures by using schemes such as the MSO scheme (Medisave cum
Outpatient Scheme).
.
Employees and unions, on the other hand, have taken for granted
that they have not had to directly contribute towards the cost of
insuring or financing medical benefits and remain reluctant to take
up this responsibility.
.
Yet, as a result of failing to co-share in the payment of premiums,
employees have become even more vulnerable. They are left with
limited company medical schemes, which leave them and their
dependants exposed to the prospect of having to pay for all medical
cost over the limited cover provided by the employer.
.
This is a risk most people cannot take. There are very few people
in Singapore who can, like the former NTUC Income CEO Tan Kin Lian,
say they can pay the medical bills out of their personal
savings.
.
If the employee has his own portable plan to supplement the
employer's GHS plan, there is duplication of cover to some extent
and therefore duplication of premiums. This is not
cost-efficient.
.
We should work to ensure that all dollars spent on medical cost are
efficiently deployed. This includes premium dollars on medical
insurance.
.
The danger of people being medically uninsured is a very serious
one. Business Week, in a recent issue, highlighted the plight of
thousands of Americans with little or no medical insurance who are
being squeezed by financial companies who had taken over their debt
from the medical providers.
.
"As doctors and hospitals turn to GE, Citi and smaller rivals to
finance patient care, the sick pay much more," said the article.
"Hospitals are transferring patient accounts to banks and finance
firms that impose interest rates as high as 27 per cent."
.
This is a picture of the United States today. We may face the same
situation if something is not done to address the way Singaporeans,
particularly the baby boomers, finance their medical cost.
.
The writer is a lawyer and chartered insurer who is immediate past
president and council member of the Singapore Insurance
Institute.